The government will sell Rs 2.16 trillion of bonds in February through March, Rs 800 billion more than its earlier target. It has another Rs 12.1 trillion of sovereign debt supply lined up for next year.
The bond auctions Thursday drew lower-than-expected cutoff yields, including 5.9726% on the benchmark 10-year note, compared with 6.03% estimated in a Bloomberg News survey.
Around Rs 250 billion ($3.4 billion) of government bonds were snapped up in the secondary market by a category of buyers that includes the monetary authority as well as pension funds and insurers, according to data from the Clearing Corp. of India. State-run banks and primary dealers were combined sellers of a similar amount.
“RBI has tried to assuage the market that by being action-oriented and sending a clear signal, they are going to be the balancing factor in the demand-supply mismatch of government bonds,” said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd. in Mumbai.